Commercial Excellence is an ever-evolving practice that forces companies to continually rethink the way they approach and measure success in the space.
Vendavo, a proven leader in price optimization, recently held our GPS 2021 Fall Summit, and had the chance to sit down with industry-leading price optimization experts and leaders from various companies to discuss their unique commercial excellence journeys.
Among them was Molex, a multi-billion dollar global supplier of advanced electronic solutions with first hand experience executing on an ambitious Commercial Excellence plan. Molex shared their journey in a information-rich webinar, which you can replay here.
During the discussion, Jordan Hahn, Senior Product Manager at Vendavo and Doctoral Candidate in Business, noted, “We have a more holistic worldview [on commercial excellence] than we did even a few years ago when we’d think about pricing and price optimization.”
Jordan brings up a great point. Commercial excellence should not only include price optimization, but also effective selling practices, as well as the commercial intelligence and analytics that can bring these pieces together into a cohesive strategy.
Jordan explains that where we were once thinking about quote to cash, or simply pricing on one side of the house, and sales on the other, we’re now thinking of a more complex web of critical capabilities and systems that comprise a broader ecosystem.
This evolved framework now informs the way Vendavo approaches and consults with customers.
Consulting Engagement Model with Customers
With the evolution of Commercial Excellence in mind, Vendavo employs the following three-pronged model to evaluate a company’s Commercial Excellence Maturity level.
- Review and level set on overall vision, as well as the solution that meets the customers need
- Benchmark against industry best practices
- Help build out a business case
- Look at data readiness
- Lead with best practices instead of expecting to optimize a system that’s already in place
- Introduce a Change Management approach
- Encourage user adoption: if users aren’t adopting a solution using predetermined best practices, overarching goals may not be achieved.
- Post go-live, make sure value is still being measured and tracked
- From there, map against the Maturity Benchmark again, and close the loop into a continual lifecycle, starting again with Assessment
Beyond the technology, it’s about the people using the software and creating sustainable practices to help them optimize their usage and ultimately see great results.
As Megan Maclean, Chief Services Officer at Vendavo explains in the webinar, thinking about Commercial Excellence in this way brings it far beyond a simple solution deployment. Beyond the technology, it’s about the people using the software and creating sustainable practices to help them optimize their usage and ultimately see great results.
Measuring Commercial Excellence Maturity
After digging into the details with their clients, Vendavo found they’ve helped clients realize an average annual value of $36.8M. That’s a 2.7% benefit as a percentage of revenue.
But how do customers reach those numbers? And how can you determine a firm’s progress within a commercial excellence journey?
You have to map out a holistic view of all the individual pieces of the puzzle that go into that B2B ecosystem. Through Vendavo’s research into this model, and after conducting a survey with over 600 responses thus far, we’ve been able to identify where the average respondent lies within the progression.
You can see for yourself where your company stands by taking the Commercial Excellence Maturity Assessment today.
The research that goes into the ComEx Maturity Assessment tool also hones in on differences in industry. The results found that High Tech firms score higher on average. On the other hand, Discrete Manufacturing and other Manufacturing verticals lagged behind. However, some of these companies actually saw the most value, relative to their competitors, who were often unsure of what to do when it came to Commercial Excellence.
The Commercial Excellence Journey at Molex
For Molex, the customer excellence journey began when they transitioned from a regional based organization structure to a product based structure. The restructuring uncovered a number of discrepancies within their pricing models, including rampant price erosion.
Corey Schroeder, Director of Commercial Excellence at Molex explains:
[We had] a lack of true visibility in our pricing to end customers, as we started quoting through different channels within a pretty complex channel organization, where we quote end customers, contract manufacturers, and distributors. Assuring that we could get the right prices to the right customers was a complex challenge, and that was the core driver behind building our pricing capability.”
After Molex made the organizational restructure and invested in a pricing solution, they saw payback on their investment in less than a year. Corey goes on to explain:
“It’s interesting that you show that number, 2.7% value [as a percentage of revenue] because it aligns very well with where our organization was with the price erosion,” Corey said, “versus now where we have about a two and a half to 3% [increase in value].”
From then on, Molex has further committed to Commercial Excellence, even building out an entire pricing organization to ensure its success.
With examples such as this, and from companies around the globe, it’s clear that commercial excellence is a pursuit worth investing in.
Make sure to capture all the tips from the webinar by watching it in its entirety here.